Apply for a mortgage on Curacao
You are going to buy a house on sunny Curaçao. Exciting! But how do you arrange financing? In this article I will tell you everything about costs that come with buying a house in Curaçao.
Adriaan Smit – Sun Life Realty
The 5 most frequently asked questions when buying a house in Curaçao:
- How much money can I borrow?
- What are the costs that I have to take into account?
- How much should I put in my own money?
- What if I have (study) debts?
- What is a bank guarantee and do I need it?
How much money can I borrow?
If you buy your first house in Curaçao and are looking for a Mortgage, it is important to know how much money you can borrow. Most banks in Curaçao use a standard calculation method to arrive at a maximum amount. Below are a number of factors that are taken into account to calculate the maximum amount to be borrowed.
1- Your and your partner’s income
Income is one of the most important factors for banks in Curaçao that determines what you can borrow. Of course, the type of employment contract that applies is also considered and if you are a director of your own company, you will also have to submit annual accounts and forecasts.
2- The (study) debts you have outstanding
In addition to your income, your debts weigh very heavily in the calculation. It is assumed that debts entail high costs, so that you will be able to borrow less. This has a much greater effect on your maximum mortgage than you would expect. It is often worthwhile to co-finance your debt in your mortgage. Other obligations such as alimony also affect the maximum amount you can borrow.
3- The value of the house you are buying
Just like in the rest of the world, banks in Curaçao also go for security. The bank will never lend more money than the value of the home. As a buyer you must therefore be able to demonstrate the value of your future home in Curaçao, you do this by submitting a valuation report. Banks in Curacao usually have a list of the appraisers they accept, so make sure you put the right appraiser to work.
4- Your age
It may sound a bit crazy. But your age also influences the amount that you can ultimately borrow. If you are approaching retirement age, it strongly depends on how high your pension will be in the future, for example. The older you are, the shorter the repayment period and the higher the monthly costs will be.
5- Where do you live
Do you live in, for example, the Netherlands or Curaçao? If you do not live in Curaçao, local banks will never finance you 100%, most banks finance a maximum of 70% of the market value, so you must have 30% plus costs of the buyer.
What are the costs that I have to take into account?
If you buy a house on Curaçao, you also pay the buyer costs in addition to the costs of the house (also abbreviated as k.k.). In addition, there are other expenses you incur. You have to take the following (extra) costs into account when you buy a house:
1- Transfer tax
When you buy a house in Curaçao you usually pay 4% of the value of the house in transfer tax. These costs are usually paid by the buyer. (monumental buildings on Curaçao are exempt from transfer tax)
When you apply for a mortgage, the bank wants to have an appraisal of the house you are buying. As a result, they know the value of the house that they have as collateral on the mortgage. An appraisal usually costs 1.2 percent of the value of the home.
3- Construction inspection
If you buy a house on Curaçao, it is wise to have an architectural inspection carried out. This shows whether there are (hidden) defects that can affect the price of the house (think of asbestos, cracks or subsidence in the foundation and bad installations, etc.). A building inspection costs on average between NAF 300 and NAF 1000 depending on the size of the house.
When you buy a house, the notary in Curaçao ensures that all money flows come together and that the house is registered in your name. The bank pays the money that you have borrowed to the notary, who returns it to the seller. In the meantime, he registers the house with the Land Registry under your name. The notary rates are set by the government in Curaçao and are therefore the same for every notary in Curaçao.
5- Mortgage advice and mediation
If you want a mortgage to buy a house, it is smart to get good advice. I’ll take care of your mortgage from start to finish, so you can take care of your upcoming housewarming.
6- (Purchase) broker
If you have engaged a purchase broker to buy a house, you pay a brokerage fee. This is usually 1% to 2% of the value of the home. These costs are negotiable.
How much should I put in my own money?
Banks in Curaçao usually only borrow a maximum of 100% of the value of the home.
In addition to the costs of your house, you also have other costs. On average you have to count on 6% extra costs. Because you can only finance part of these costs in a mortgage, you also have to take into account that you have to put in money yourself. This can be savings, equity from the sale of another house or, for example, help from your parents (also known as a family bank).
What if I have (study) debts?
When calculating the maximum mortgage, the debts you have are also taken into account. These count very heavily in the maximum mortgage you can get. Your student debt has not been registered, but you are expected to state this when applying for your mortgage. Banks can often also see from your statements that you are making a monthly payment to DUO. You can do a number of things if you (just) do not have enough borrowing capacity.
- Pay off debts
- Co-finance debts with the mortgage
What is a bank guarantee and do I need it?
When you are going to buy a house, a deed of sale is drawn up – that is the provisional purchase contract. The deed of sale usually includes resolutive conditions, so that the purchase can be dissolved if, for example, the buyer cannot arrange the financing. A bank guarantee is sometimes required to protect the seller. Usually this is 10% of the purchase price, as a kind of goodwill towards the seller that the house will actually be bought. The bank then guarantees the deposit. They do charge service costs for this, usually about 1% of the deposit. With a purchase price of NAF 300,000 and a deposit of NAF 30,000 (10%), you pay the bank NAF 300 for bank guarantee.
Can’t see the wood for the trees?
As you have been able to read, a lot has to be arranged before you get the keys at the notary. With all these things you will be helped by our advisors. Step-by-step. So that you understand it yourself. Shall we?
This article was written by Adriaan Smit- Sunlife Real Estate CEO & sales broker in Curaçao
Categorieën: financieel, News, notaris op Curacao
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